Brilliant Color is a small supplier of chemicals and equipment that are used by some photographic stores to process 35mm film. One product that Bril- liant Color supplies is BC-6. John Kubick, president of Brilliant Color, normally stocks 11, 12, or 13 cases of BC-6 each week. For each case that John sells, he receives a profit of $35. Like many photo- graphic chemicals, BC-6 has a very short shelf life, so if a case is not sold by the end of the week, John must discard it. Since each case costs John $56, he loses $56 for every case that is not sold by the end of the week. There is a probability of 0.45 of selling 11 cases, a probability of 0.35 of selling 12 cases, and a probability of 0.2 of selling 13 cases. (a) Construct a decision table for this problem. Include all conditional values and probabilities in the table. (b) What is your recommended course of action? (c) If John is able to develop BC-6 with an ingredi- ent that stabilizes it so that it no longer has to be discarded, how would this change your recom- mended course of action?

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**Transcription for Educational Website**

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**Brilliant Color: Decision-Making and Inventory Management**

**Case Study: Brilliant Color**

Brilliant Color is a small supplier of chemicals and equipment used by some photographic stores to process 35mm film. A notable product offered by Brilliant Color is BC-6. John Kubick, the president of Brilliant Color, typically stocks 11, 12, or 13 cases of BC-6 each week. The profit per case sold is $35. However, BC-6 has a short shelf life, similar to many photographic chemicals. Cases that are not sold by the end of the week must be discarded. The cost per unsold case is $56.

**Sales Probability:**
- **11 cases:** Probability of 0.45
- **12 cases:** Probability of 0.35
- **13 cases:** Probability of 0.20

**Tasks:**

(a) Construct a decision table for this problem. Be sure to include all possible outcomes, conditional values, and probabilities in your table.

(b) Provide your recommended course of action.

(c) If a stabilizing ingredient for BC-6 is developed, making it unnecessary to discard unsold cases, analyze how this could alter the recommended course of action.

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**Educational Insights:**

- **Decision Tables:** An important tool used to depict actions based on different conditions. Students will learn how to calculate potential profits and losses using given probabilities and costs.
  
- **Inventory Management:** Understanding the implications of perishable goods and making informed stocking decisions based on probabilistic sales forecasts.

- **Product Development:** Exploring how innovations, like a stabilizing ingredient, can transform inventory and sales strategies.

This case study exemplifies real-world business decisions, integrating probability, cost analysis, and strategic planning in inventory management.
Transcribed Image Text:**Transcription for Educational Website** --- **Brilliant Color: Decision-Making and Inventory Management** **Case Study: Brilliant Color** Brilliant Color is a small supplier of chemicals and equipment used by some photographic stores to process 35mm film. A notable product offered by Brilliant Color is BC-6. John Kubick, the president of Brilliant Color, typically stocks 11, 12, or 13 cases of BC-6 each week. The profit per case sold is $35. However, BC-6 has a short shelf life, similar to many photographic chemicals. Cases that are not sold by the end of the week must be discarded. The cost per unsold case is $56. **Sales Probability:** - **11 cases:** Probability of 0.45 - **12 cases:** Probability of 0.35 - **13 cases:** Probability of 0.20 **Tasks:** (a) Construct a decision table for this problem. Be sure to include all possible outcomes, conditional values, and probabilities in your table. (b) Provide your recommended course of action. (c) If a stabilizing ingredient for BC-6 is developed, making it unnecessary to discard unsold cases, analyze how this could alter the recommended course of action. --- **Educational Insights:** - **Decision Tables:** An important tool used to depict actions based on different conditions. Students will learn how to calculate potential profits and losses using given probabilities and costs. - **Inventory Management:** Understanding the implications of perishable goods and making informed stocking decisions based on probabilistic sales forecasts. - **Product Development:** Exploring how innovations, like a stabilizing ingredient, can transform inventory and sales strategies. This case study exemplifies real-world business decisions, integrating probability, cost analysis, and strategic planning in inventory management.
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